“Overtrade”

[Enye]

there are 2 forms of overtrade as described by mcfers here

you need to find out which form is your ad offering and whether if the form is acceptable to you

🤗

[Macrosszero]

52 minutes ago, Etnt said:

i've heard of some rare cases where they have been able to get the OT converted to straight discount, but those are extremely rare cases and shouldn't be taken as the norm.

These are the games that some dealer's play, and if one insist on no OT, then just don't get the car lor.

If you happen to be buying a car without a trade-in, some dealers make a special discount appear in lieu of the overtrade figure-fudging exercise

[Daniu82]

So is there a kind of overtrade which does not increase the monthly installments? 

[Etnt]

1 hour ago, Macrosszero said:

If you happen to be buying a car without a trade-in, some dealers make a special discount appear in lieu of the overtrade figure-fudging exercise

But that discount acts like the overtrade, still not budging the list price.

Usually only minor things like opting out of cameras, solar films, grooming packages will knock a small amt off.

[Voodooman]

2 hours ago, Stratovarius said:

i always thought whatever amount overtrade given will be added to the selling price of the new car. It basically reduces the DP and increases the loan amount. Am i wrong? 

No. The selling price is the same. Just the trade in price, which can be inflated, to help buyer qualify for a loan. Less DP.

You buy at listed price but discount is indirect. 

Think others have explained it better than me. 

 

 

[Carbon82]

There are several 'benefits' (mainly to the dealer advantage) and I shall briefly touch on 2 of them. 

First of all, it allows the dealer to sell a more expensive model to buyer through lowering the downpayment requires (while earning more through loan interest and commission). 

Say a car is retailing at $200k, downplayment needed should be $80K (40% of selling price) and the remaining $120K to be serviced though loan. 

With a $30K overtrade, where this amount will be used offset the downpayment, the buyer will 'just' need to pay $50K to drive home with a new car. Sounds pretty attractive isn't it? 

Now if the dealer have choose to give an upright discount of $30K (i.e. selling the new car at $170k), the downplayment would be $68K, or $18K higher than the overtrade scheme, and some buyer might walk away if they think that it is too much for them (whether they can afford or not is a separate matter).

Now let also take a closer look at the loan amount and interest payable.

$120K loan (overtrade scheme) for 7 years at interest rate of 2.5% p.a.

• Interest payable = $$21,000
• Monthly installment = $1,678.57

$102K loan for 7 years at interest rate of 2.5% p.a.

• Interest payable = $$17,850
• Monthly installment = $1,426.79

While the buyer would be paying $251.79 more for their monthly installment, the dealer will likely physco them that this extra could be easily offset with the higher pay they would be getting through increment and promotion, along with the usual scare tactics that the price would be going up by $xxK tomorrow / next week / next few months. 

The dealer would get to make more from loan commission (say $900, at 5% commission rate), and the bank earned $3,150 more in interest payable through the 7 year tenure. 

OK the 2nd point I want to illustrate is rather straightforward, the overtrade amount make the seller's trade-in value appear much more attractive as compared to the other offers they received or even used car price on say sgcarmart. A few of my friends and relatives have asked me why dealer XXX / YYY / ZZZ can offer them a trade-in value that is higher than what used car dealer are selling the car, and you should know the answer by now.

[Daniu82]

On 3/4/2021 at 1:48 PM, Carbon82 said:

There are several 'benefits' (mainly to the dealer advantage) and I shall briefly touch on 2 of them. 

First of all, it allows the dealer to sell a more expensive model to buyer through lowering the downpayment requires (while earning more through loan interest and commission). 

Say a car is retailing at $200k, downplayment needed should be $80K (40% of selling price) and the remaining $120K to be serviced though loan. 

With a $30K overtrade, where this amount will be used offset the downpayment, the buyer will 'just' need to pay $50K to drive home with a new car. Sounds pretty attractive isn't it? 

Now if the dealer have choose to give an upright discount of $30K (i.e. selling the new car at $170k), the downplayment would be $68K, or $18K higher than the overtrade scheme, and some buyer might walk away if they think that it is too much for them (whether they can afford or not is a separate matter).

Now let also take a closer look at the loan amount and interest payable.

$120K loan (overtrade scheme) for 7 years at interest rate of 2.5% p.a.

• Interest payable = $$21,000
• Monthly installment = $1,678.57

$102K loan for 7 years at interest rate of 2.5% p.a.

• Interest payable = $$17,850
• Monthly installment = $1,426.79

While the buyer would be paying $251.79 more for their monthly installment, the dealer will likely physco them that this extra could be easily offset with the higher pay they would be getting through increment and promotion, along with the usual scare tactics that the price would be going up by $xxK tomorrow / next week / next few months. 

The dealer would get to make more from loan commission (say $900, at 5% commission rate), and the bank earned $3,150 more in interest payable through the 7 year tenure. 

OK the 2nd point I want to illustrate is rather straightforward, the overtrade amount make the seller's trade-in value appear much more attractive as compared to the other offers they received or even used car price on say sgcarmart. A few of my friends and relatives have asked me why dealer XXX / YYY / ZZZ can offer them a trade-in value that is higher than what used car dealer are selling the car, and you should know the answer by now.

With your explanation, it’s much clearer. With over trade, basically is lower DP but loan will be higher with higher installments to pay when compared to without overt ease. Thanks! 

[Stratovarius]

1 hour ago, Voodooman said:

No. The selling price is the same. Just the trade in price, which can be inflated, to help buyer qualify for a loan. Less DP.

You buy at listed price but discount is indirect. 

Think others have explained it better than me. 

 

 

Hmmm okay thanks. Seems that we are talking about different things. i was offered overtrade when looking for a new car and it doesn't work this way. Basically whateva amount is overtraded, it will add up to the car's selling price. He even asked me how much i want to overtrade. In which i tell him go fly kite albeit in a more friendly way. lol. 

[yishunite]

Just now, Stratovarius said:

Hmmm okay thanks. Seems that we are talking about different things. i was offered overtrade when looking for a new car and it doesn't work this way. Basically whateva amount is overtraded, it will add up to the car's selling price. He even asked me how much i want to overtrade. In which i tell him go fly kite albeit in a more friendly way. lol. 

The fact that overtrade amount is "unlimited" should be huge warning sign lol

[Stratovarius]

3 minutes ago, yishunite said:

The fact that overtrade amount is "unlimited" should be huge warning sign lol

haha. No la. I remember there is a range of maybe 5 to 20k. Something along the line. 

[Etnt]

14 minutes ago, Stratovarius said:

Hmmm okay thanks. Seems that we are talking about different things. i was offered overtrade when looking for a new car and it doesn't work this way. Basically whateva amount is overtraded, it will add up to the car's selling price. He even asked me how much i want to overtrade. In which i tell him go fly kite albeit in a more friendly way. lol. 

This is the classic scenario that's a big no no.

[Zxcvb]

3 hours ago, Carbon82 said:

the dealer will likely psycho them that this extra could be easily offset with the higher pay they would be getting through increment and promotion.

Yeh right... Next thing you know, kenna retrenched!!! 

[RadX]

i have one principle

 

If you have to think so much, come here seek opinions, buy-in, gain the mass to like your idea, means

 

you CANNOT afford it!

 

PEriod!

[Mkl22]

2 minutes ago, RadX said:

i have one principle

 

If you have to think so much, come here seek opinions, buy-in, gain the mass to like your idea, means

 

you CANNOT afford it!

 

PEriod!

Straight to the point! I like. 😀

[Vid]

13 minutes ago, RadX said:

i have one principle

 

If you have to think so much, come here seek opinions, buy-in, gain the mass to like your idea, means

 

you CANNOT afford it!

 

PEriod! 

Aiyo... not everybody buy car like you to chope carpark lot leh.

[RadX]

Just now, Vid said:

Aiyo... not everybody buy car like you to chope carpark lot leh.

and ot add on, is it a want or need, if its a want, then dun buy it...but i WANT to chope carpark so i buy!

[inlinesix]

1 minute ago, RadX said:

and ot add on, is it a want or need, if its a want, then dun buy it...but i WANT to chope carpark so i buy!

When are you going to the dark side (EV)?

😂

[RadX]

1 minute ago, inlinesix said:

When are you going to the dark side (EV)?

😂

wait for infra.....for now, is a pipedream, so screw mother earth first